The postponement comes in response to operational challenges faced by custodians and other stakeholders.In January, Sebi issued guidelines to revamp the nomination process for mutual fund folios and demat accounts to increase transparency and minimize unclaimed assets in the securities market.
Following representations from various industry associations, the regulator has decided to adopt a phased implementation approach through a subsequent circular in February 2025.
However, custodians, depository participants and industry associations have again raised operational challenges and requested more time to update their systems and processes.
“In view of the foregoing, it has been decided to defer the timeline for implementation of the above circular from December 15, 2025, to a later date to be announced separately,” Sebi said. According to the circular, if one or more joint account holders die, the assets will be transferred to the surviving holder(s) without the need for additional KYC unless previously requested and not provided.
The guidelines targeted entities such as AMCs, custodians and other market participants by introducing significant changes to the survivorship rule, mandatory nomination for individual holding companies and enhanced safeguards for authenticity.
Under the survival rule, assets in joint accounts are transferred to the surviving holders without affecting previous nominations or operating modalities.
Furthermore, the market watchdog also introduced robust measures to verify and validate nominations.
Sebi highlighted new rules that allow investors to nominate up to 10 people in the account/folio, with an option to specify percentage allocations for each.
In the absence of such specification, the assets will be distributed equally among all nominees. In the event of the death of the investor and any of the nominees, the regulated entities will distribute the assets pro rata to the remaining nominees.
The market watchdog clarified that nominees will receive the assets as trustees on behalf of the account holder’s legal heirs, with no direct inheritance rights for the heirs of a predeceased nominee.
One of the key features of the updated system is the addition of digital and physical channels for submitting or updating nominations.
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